Home > News > Top Stories > BlackRock Launches Industry’s First BuyWrite Fixed Income ETFs

Fintech

BlackRock Launches Industry’s First BuyWrite Fixed Income ETFs

BlackRock today launched a first-of-its-kind suite of fixed income ETFs that provide access to buy-write investment strategies on baskets of fixed income securities: the iShares 20+ Year Treasury Bond BuyWrite Strategy ETF, iShares High Yield Corporate Bond BuyWrite Strategy ETF and the iShares Investment Grade Corporate Bond BuyWrite Strategy ETF. Each ETF packages two potential income sources into one ticker – premiums generated by selling monthly call options on the underlying ETFs and the yields from each of the underlying ETFs themselves.

“The iShares’ bond ETF platform has the world’s largest, comprehensive toolkit1 for individuals and institutions by providing access to the $124 trillion fixed income market with essential building blocks for a wide variety of macroeconomic climates, Market participants have used a buy-write strategy on equities since options were first listed more than 50 years ago. The iShares Bond BuyWrite ETFs introduce these capabilities to fixed income, pioneering new possibilities for an asset class sitting at the center of so many long-term portfolios.”

- Carolyn Weinberg, Global Head of Product for ETF and Index Investments, BlackRock

Helping Investors; Capital Markets Innovation

The iShares BuyWrite ETFs aim to increase yield potential for investors, debuting during the most challenging environment for fixed income in decades due to inflation, hawkish central banks and interest rate volatility.

Each iShares BuyWrite ETF seeks to track a designated index from Cboe Global Indices by owning shares of the underlying ETF and selling one-month call options at a strike price at or near the closing price of the ETF the day before the strategy writes the call options. Each month, the iShares BuyWrite ETFs will distribute to shareholders both the call option premiums collected and the underlying funds’ monthly distributions.

TLT, HYG and LQD have grown into important financial instruments in the fixed income markets and have some of the most liquid options markets of any ETF2, Our buy-write exposures expand the functionalities of bond ETFs by unlocking a sophisticated use case with a potential to enhance income for investors in this volatile yield environment, said Stephen Laipply, U.S. Head of Bond ETFs at BlackRock.

BlackRock pioneered bond ETFs in 2002 with the launch of four products and this space has since grown 23% annually into a $1.7 trillion industry with more than 1,400 offerings.3 Over 20 years, bond ETFs have become fundamental to fixed income investing and BlackRock estimates they will reach $5 trillion in AUM by the end of the decade.

About BlackRock
BlackRock’s purpose is to help more and more people experience financial well-being. As a fiduciary to investors and a leading provider of financial technology, we help millions of people build savings that serve them throughout their lives by making investing easier and more affordable.

About iShares
iShares unlocks opportunity across markets to meet the evolving needs of investors. With more than twenty years of experience, a global line-up of 900+ exchange traded funds (ETFs) and $2.78 trillion in assets under management as of June 30, 2022, iShares continues to drive progress for the financial industry. iShares funds are powered by the expert portfolio and risk management of BlackRock.

Spotlight

Is Excess Inventory Your New Year Fear? How an Online B2B Recommerce Marketplace Can Quickly Move Out PostHoliday Returns and Excess Inventory

Experts predict record sales for US brands and retailers this holiday season. Unfortunately, with return rates at an all-time high and supply chain breakdowns fresh in our memory, it's hard to forecast just how much stock to produce or buy—and your business may well find itself with a surplus of unsold and returned merchandise a

More featured news

Spotlight

Is Excess Inventory Your New Year Fear? How an Online B2B Recommerce Marketplace Can Quickly Move Out PostHoliday Returns and Excess Inventory

Related News

Trading Systems

Finastra signs global agreement with Microsoft to accelerate trade platform modernization

PR Newswire | September 27, 2023

Finastra today announced a multi-year global agreement with Microsoft focused on trade platform modernization, building on the existing availability of Finastra Trade Innovation in the cloud. Delivering the full functionality of Trade Innovation via a full microservices architecture using Microsoft Azure, will give banks increased agility, flexibility and scalability, enabling them to continue to provide service excellence to customers throughout their modernization journey. As the expectations of corporate customers evolve, financial institutions need to deliver a seamless and engaging transactional experience across their trade finance and supply chain finance operations in support of open finance. Further extending the open APIs available through Trade Innovation and Finastra's open innovation platform, FusionFabric.cloud, will allow customers to leverage a vibrant digital trade ecosystem, supporting the digitalization of the full transaction lifecycle. Partnering with Microsoft builds on our joint strategic vision to help accelerate the digital transformation of financial services, and support customers on their journeys to be open, said Isabel Fernandez, Executive Vice President for Lending at Finastra. Customers are eager to transform their trade finance and supply chain offerings, and to access the latest innovations, working with partners across the ecosystem. Via this agreement, existing and new customers will benefit from increased flexibility to connect, collaborate and adapt to evolving customer needs and new regulations. Bill Borden, Corporate Vice President, Worldwide Financial Services, Microsoft added: We're excited to deepen our relationship with Finastra to support banks on their trade modernization journey. Using the rich functionality of Finastra's Trade Innovation platform and FusionFabric.cloud, combined with the power of Microsoft Azure and data and AI advancements, we look forward to helping financial institutions further accelerate innovation, increase efficiencies, enhance customer engagement and transform their operations at scale. Finastra Trade Innovation was recognized once again as "Best in Class" in the Aite Matrix of Trade Finance Software (Feb 2023) from Datos Insights (formerly Aite-Novarica Group). Enrico Camerinelli, Strategic Advisor at Datos Insights said: "The decline of manually intensive and paper trade finance operations, the continued growth of supply chain finance, and the rise of fintech players are encouraging banks to transform the status quo with API-based open banking, artificial intelligence, and data analytics. To achieve this, banks need modern, open systems and the support of industry leaders in this space, supporting them on their transformation journeys."

Security and Compliance

Genpact Integrates riskCanvas with Amazon Bedrock to Transform Financial Crime Management with Advanced Generative AI Capabilities

PR Newswire | September 29, 2023

Genpact (NYSE: G), a global professional services firm focused on delivering outcomes that transform businesses, expanded its relationship with Amazon Web Services, Inc. (AWS) to transform financial crime risk operations, leveraging generative AI and large language models (LLMs). Integrating Genpact's proprietary cloud-based financial crime suite, riskCanvas™, with Amazon Bedrock, has led to accelerated efficiencies and impact for clients such as Apex Fintech Solutions. Amazon Bedrock is a fully managed service that enables developers to test, integrate, and deploy industry-leading foundation models (FMs) via an application programming interface (API) and customize the models to best suit their unique use cases. Building on its existing relationship with AWS, Genpact is now combining its intellectual property and deep industry expertise with AWS's generative AI capabilities. For example, seamlessly incorporating Amazon Bedrock FMs into Genpact's riskCanvas financial crimes software suite aims to unlock exponential value and improve speed and accuracy in the detection, investigation, and prevention of financial crime threats for operations across enterprises. This allows experts to review outputs and incorporate a guided decision-making process, providing comprehensive summaries and analyses of potential financial crime activities – accelerating both efficiency and precision. Genpact engaged multiple riskCanvas clients to significantly improve the detection, investigation, and prevention of a wide range of financial crime threats. As a result, Genpact is now driving accelerated efficiencies and delivering substantial impact for these clients in finance and capital markets, exemplified by their work with Apex Fintech Solutions. "Financial criminals are constantly innovating, which means financial services companies need to use advanced digital technologies to stay one step ahead of them," said Justin Morgan, Head of Financial Crimes Compliance at Apex Fintech Solutions. "With the addition of generative AI features to Genpact's riskCanvas, our analysts will be able to produce Suspicious Activity Report (SAR) narratives and case summaries at the click of a button using inputs from millions of data points. We expect this will reduce time spent on case summarizations by 60%, allowing our analysts to spend more time identifying truly suspicious financial activity." Using approved client data from the secure riskCanvas ecosystem, combined with Amazon Bedrock's secure data handling, enables the generation of highly accurate outcomes while maintaining data protection across clients. "Responsible AI is a core consideration in AI implementation and its importance will continue to increase, said Atul Deo, General Manager, Amazon Bedrock at AWS. Amazon Bedrock is rooted in secure data handling, encrypting all data and allowing users to customize models privately. Integrated with Genpact's riskCanvas, this powerful combination enables our mutual customers to enhance productivity in investigating, detecting, and preventing financial crime threats. The initiative enables clients to fully leverage the potential of generative AI solutions and drive secure, scalable, AI-led transformation. "Data complexity and volume, false positives, and evolving sophisticated criminal tactics are accelerating the need for businesses to harness generative AI to transform financial crime operations," said BK Kalra, Global Business Leader, Financial Services, Consumer and Healthcare, Genpact. "Genpact's expanded relationship with AWS represents a pivotal step in redefining the operations landscape for enterprises. Together we can unlock untapped value, and fuel significant growth opportunities for our clients, solidifying our commitment to delivering valuable business impact." For more information on Genpact's relationship with AWS, visit: AWS | Our Partners | Genpact, and for more information on our financial services visit: AWS Financial Services | Our Partners | Genpact.

Payments

Finastra's Compliance as a Service Battles Instant Payment Crimes

Finastra | September 20, 2023

Finastra's new solution merges real-time sanctions screening and AI-powered anti-money laundering for FedNow in the US and TIPS in Europe. Initiatives are underway to integrate Finastra Compliance as a Service with Finastra Global PAYplus soon. This comprehensive solution automates compliance for US and European banks by leveraging proven technology to facilitate instant payments. Finastra, a global provider of financial software applications and marketplaces, has officially unveiled its latest payment solution, Finastra Compliance as a Service, hosted on the Microsoft Azure platform. It will incorporate real-time anti-money laundering (AML) transaction screening from Fincom and AI-powered transaction monitoring by ThetaRay, presenting a pre-integrated packaged solution alongside Finastra Payments To Go. Mike Vigue, Chief Product Officer for Payments at Finastra, underscored the increased risks associated with introducing a new payment rail, mainly when it operates in real-time. He articulated Finastra's commitment to leveraging the successful track record of 'Payments To Go' for instant payments. He emphasized that the company's objective is to provide financial institutions with precise and efficient compliance capabilities, ultimately reducing the total cost of ownership. Finastra Compliance as a Service will facilitate banks in capitalizing on and adhering to various instant payment infrastructures, such as the FedNow service in the United States and TIPS in Europe while mitigating the elevated risks associated with financial crime. Through the integration of real-time compliance screening by Fincom and AI-driven transaction monitoring by ThetaRay, this service will empower financial institutions to expedite their business expansion, broaden risk management coverage, and curtail operational expenses. Mike Vigue further added that through the seamless integration of Fincom and ThetaRay into their solutions, Finastra's clients can expedite the launch of instant payment services while enhancing security, scalability, and flexibility. He concluded that the company remains committed to supporting banks in keeping pace with evolving customer, industry, and regulatory demands through ongoing payment innovation and collaboration with partner ecosystems to provide top-tier services. Radha Suvarna, Head of BaaS and Value-Added Payment Solutions at Finastra added, By delivering relevant value-added payment risk solutions as a service, we will help banks to improve speed-to-market and ensure our customers stand to benefit from the ongoing evolution in enabling capabilities like AI and Machine Learning. [Source - Cision PR Newswire] 'Payments To Go' represents a comprehensive software-as-a-service (SaaS) payment processing solution, empowering banks to expedite the delivery of flexible digital payments with enhanced efficiency. Financial institutions can easily subscribe to this solution via Microsoft Azure Marketplace, streamlining billing under a single invoice.